DRM 0.00% 33.0¢ demetallica limited

how good is drm?, page-2

  1. 8,972 Posts.
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    Hi goMine

    I haven't posted on DRM for awhile, or HC for that matter except for a few posts here and there on NST, but I can tell you I am a huge fan and a large holder. It is by far my largest gold stock holding in terms of value.

    Given I have held since the IPO last Feb, obviously the last few months were a little frustrating as I watched the SP tumble from a high of $1.73 (or so) to a quite recent low of 60c. Though I was able to accumulate quite a few more at 70c+

    The thing is that while I was 'frustrated', I was not concerned at all as I am that confident that DRM has a very bright future.

    I'll briefly comment on what it has going for it in my view:

    1. Top management: MD knows this area like the back of his hand, and Heath Hellewell is a gun (he would not have moved over from IGO unless he saw enormous potential). Since IPO they have attracted three other significant mining identities, Peter Alexander and Peter Junk both of Dominion Mining fame (Challenger mine) and Mark Cossom. Again three people that would not have signed up unless they saw potential.

    2. Current Wilber resource is probably in the top 3-4 mines in Australia in terms of grade and its pretty much consistent all the way down, so an easy transition from open pit to underground.

    3. It is becoming more and more likely that Wilber and Wilber South will join up (in fact I reckon its a definite since the porphyry they though was there blocking it off seems not to be!). This will mean a VERY big increase to resources, and a much more significant open pit operation and therefore high production.

    4. A dominant land position in the Meekatharra region which is attracting massive interest. The only reason overseas companies haven;t come over the top and snapped several of the companies in this region up is the strong AUD. But I expect cashed up Aussie goldies (probably those operating in the same region) to be taking a close look at companies in this area. And with Wilber being such a great resource, I expect it to be at the top of the shopping list.

    5. Related to 4, they have not even scratched the surface. I am aware that management is extremely keen on the potential at Abbots (see recent ann 14/7 which confirms drilling has commenced)). I personally am pretty keen on Magnet North ( prospectus gives the best info on that and other projects if you can get a hold of it, the diagrams with historic drill results tell the story, at least they did for me which is why I took so many in the IPO which luckily my broker handled)

    6. Excellent cash balance for exploration. Management made a VERY good call in raising a significant amount of cash at once at a decent price, rather than the small cap raising that other companies for some reason seem to be addicted to. Although in DRM's case, I guess it wasn't exactly hard to raise cash given how many fundies/insto investors wanted to get a toehold in there. No doubt the cash has been diluted quite a bit given the amount of exploration, but I reckon they still have plenty before they need to go back to the market for more.

    7. Related to 6, a tight capital structure. Given the raisings were done at a good price, the dilution was minimal. And given they raised such a large amount, don;t expect the capital structure to blow out anytime soon. In fact given that I believe the SP will be much higher by the time they get around to wanting development funds, I expect the capital structure will stay tight indefinitely (reminds me of IGO which still has bugger all shares on issue!)

    Anyway they are a few of the reasons why I rate DRM so highly. I just hope that if a company comes over the top, management tells them to bugger off (unless they offer a VERY attractive price - and imo thats well north of what their high was).

    Cdchi1
 
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